Hiring Logjam Breaks as CEOs Plan Fastest U.S. Growth Since 2006

Manufacturing is a bright spot in a labor market still so weak that December’s unemployment rate of 8.5 percent was the lowest in three years. Photographer: Paul Taggart/Bloomberg

Jan. 13 (Bloomberg) -- Companies from General Electric Co.
to yogurt producer Chobani are adding U.S. workers, accelerating
a rebound in hiring, as chief executive officers prepare for
greater demand in a strengthening economic recovery.

Boeing Co. is bringing in more than 100 union machinists a
week for a 60 percent boost in output by 2014. Nissan Motor Co.
will expand in Tennessee with 1,000 people making lithium-ion
batteries. And a GE executive was at a Kentucky appliance plant
before dawn this month to greet some of 500 new employees.

“The next few years are going to be a different picture
than what we saw in the last few,” said Hamdi Ulukaya, CEO and
founder of South Edmeston, New York-based Chobani, which is
building a 300-worker plant in Twin Falls, Idaho. “To get ready
for this, we need to have our manufacturing capacity in place.”

The hiring reflects optimism among CEOs that the economy
will continue to strengthen and more workers will be needed to
meet demand. It may signal an end to a lockdown on job growth
following the financial crisis that lingered even after the
recession ended in June 2009, with economists estimating more
new jobs created this year than any time since 2006.

Manufacturing, whether for GE refrigerators or Greenbrier
Cos. rail cars, is a bright spot in a labor market still so weak
that December’s unemployment rate of 8.5 percent was the lowest
in three years. U.S. factory payrolls expanded by 225,000 jobs
in 2011, more than double the total from a year earlier.

‘Pretty Decent’

“The ground seems to be set for a pretty decent near-term
outlook for manufacturing,” said Stephen Stanley, chief
economist for Pierpont Securities in Stamford, Connecticut.
“There’s still room for job growth there if demand continues to
pick up.”

That’s a possibility at the U.S. unit of Germany’s Harting
Deutschland GmbH, a maker of industrial connectors. CEO Rolf
Meyer said his business probably will hire 20 more people in
2012, after doubling the workforce to 120 since the recession.

“We have a couple of large orders that we’re negotiating
on in the broadcast and medical industries, and these will
likely hit in the next five or six months,” said Meyer, who
supplies customers such as GE, Siemens AG and Alstom SA from
operations based in Elgin, Illinois.

Investors have taken note: The Standard & Poor’s 500
Industrials Index gained 23 percent through yesterday since the
start of the fourth quarter, compared with a 15 percent advance
for the broader S&P 500.

Wage Cut

GE, based in Fairfield, Connecticut, will meet higher
demand for more energy-efficient appliances with new production
of water heaters and refrigerators in Louisville, Kentucky. A
union agreement in 2010 to cut hourly starting salaries to $13
and to increase efficiency helped bring back work to the U.S.
from China and Mexico.

“Throughout the first quarter, we’ll be bringing people
in,” said Dirk Bowman, general manager of manufacturing for
GE’s appliance unit who welcomed some new workers at a factory
in Louisville, Kentucky, to clapping and cheering at 6 a.m. one
day this month. “It feels great.”

The new U.S. workers at Nissan, Japan’s second-largest
carmaker, will produce batteries for the electric Leaf compact
built nearby in Smyrna, Tennessee. Chrysler Group LLC, the U.S.
automaker majority-owned by Fiat SpA, will add a third shift at
it Detroit plant that makes the Jeep Grand Cherokee and Dodge
Durango sport-utility vehicles, creating 1,100 jobs.

10,000 Jobs

Boeing, responding to airlines clamoring for more fuel-efficient jets, added 10,000 jobs last year as hiring in the
Chicago-based planemaker’s commercial aircraft unit made up for
shrinking defense employment.

New employees for Boeing’s Seattle-area plants are piling
into orientation sessions held by the planemaker each Friday,
said Tommy Wilson, a Machinists union official. The six-hour
meetings, in an auditorium near Boeing Field, focus on policies
from badge usage to parking, benefits and avoiding personal use
of Internet access.

“They’ve been hiring like crazy,” said Connie Kelliher, a
union spokeswoman in Seattle. “We’ve long since exhausted the
people on layoffs and they’ve been new hires.”

Production increases at the world’s largest aerospace
company are rippling out to suppliers such as Spirit AeroSystems
Holdings Inc. and Rockwell Collins Inc. Wichita, Kansas-based
Spirit boosted its workforce by 1,000 to 15,000 last year and
will hire at the same pace in 2012, said Ken Evans, a spokesman.

The U.S. may add 1.7 million jobs this year, the fastest
pace since 2006, based on economists’ estimates compiled by Blue
Chip Economic Indicators.

Risks to U.S.

Faster payroll growth should spur a 2.3 percent expansion
in the U.S. economy in 2012, according to the median estimate of
84 economists compiled by Bloomberg. Europe is projected to
contract by 0.2 percent and China’s economy is forecast to cool
to 8.5 percent growth from 9.2 percent in 2011.

The risk to the U.S. is that Europe’s sovereign-debt crisis
may worsen or that China’s slowdown becomes more abrupt, said
Stanley, the Pierpont Securities economist.

“The economy is not so strong that it’s invincible to
shocks,” Stanley said.

Metlife Inc., the largest U.S. life insurer, said this week
it will shut its mortgage-origination business, eliminating most
of the 4,300 employees. Archer Daniels Midland Co., the world’s
largest grain processor, plans to cut 1,000 jobs to trim costs.

Kurt Rankin, an economist at PNC Financial Services Group
Inc. in Pittsburgh, expects job growth this year to average
135,000 a month, a pace at which it would take years for the
economy to make up for the 8.7 million positions lost in 2008
and 2009.

Engineering Talent

“It would be a stretch to say we would be able to recover
to pre-recession levels by anywhere before the middle of the
decade,” said Rankin, who predicts the unemployment rate will
end this year at 8.2 percent or 8.3 percent.

Hiring began to pick up in mid-2011 among employers seeking
engineering and technology-related workers, said Jesse Harriott,
senior vice president and chief knowledge officer at Monster
Worldwide Inc., the world’s largest online recruiter.

Some industries have remained mostly unscathed by the
recession, including oil and gas, technology and precious
metals. Gold miners are struggling to find qualified applicants,
said Rob McEwen, CEO of U.S. Gold Corp. in Lakewood, Colorado.
The labor pool dwindled in the 1980s and 1990s as weak metals
markets deterred many would-be employees from mining schools, he
said.

‘Like Bacteria’

Martin Holdrich, senior economist at Woods & Poole
Economics Inc. in Washington, said the factory-hiring rebound
suggests a recovery in manufacturing employment toward pre-recession levels of 14 million jobs at the end of 2006, from
fewer than 12 million last year. Concerns that those losses
would all be permanent were overstated, he said.

“Manufacturing is a lot like bacteria,” Holdrich said.
“As long as you don’t kill them all, they’ll flourish again
when the conditions are right.”